The Achilles' heel of German climate policy Phasing out coal by 2038

Based on a comprehensive final report by the commission for "Growth, Structural Change and Work", also known as the coal commission, the German Parliament approved laws on 7 June that pave the way for Germany to switch to a socially and economically compatible energy system without CO₂-intensive coal-based electricity.

Key elements are a roadmap for the gradual shut-down of all coal-fired power stations by the target phase-out year 2038 and a comprehensive aid package of 40 billion euros for all those affected (staff, energy users and the energy sector) and for the restructuring of the German coal regions.

These flagship policies are intended to tackle three challenges in equal measure: CO₂ emissions are to be reduced in order for Germany to still meet its climate targets for 2030. At the same time, energy security must also be ensured and the adverse socio-economic impact on the affected regions mitigated as much as possible.

While the government, coal-producing states, trade unions and coal industry are quite satisfied with the results of the coal commission and the legislation on the phase-out, heavy criticism is coming from climate protection circles. Experts agree that the set phase-out year, 2038, is too late.

Coal – Germany’s dirtiest energy source

Germany’s pioneering role in the fight against man-made climate change is increasingly fading. The once celebrated energy transition, a climate policy duo of nuclear phase-out and expansion of renewable energy, falls short of the mark. The German carbon budget has hardly changed in the last 20 years. Between 1995 and 2017 greenhouse gas emissions throughout Germany were reduced by a mere ten percent.

Even though climate-neutral energy sources – wind and solar – are registering at a record high 45 to 50 percent in the electricity sector, coal-fired generation remains at a high level. Germany continues to be the world’s largest producer of lignite. Some 40 percent of the electricity produced in Germany comes from the burning of lignite and coal. This is problematic because coal is the dirtiest of all energy sources. It is responsible for 70 percent of emissions generated to cover the entire German electricity demand.

As a result, coal-fired generation has many pitfalls. The most pressing concern is the damage it’s doing to the climate, as the Earth is getting warmer. In the coming years, the average global temperature could rise more than 1.5 degrees above pre-industrial levels, reports the World Meteorological Organization (WMO). This value should not be exceeded if at all possible. A temperature rise of more than two degrees Celsius will result in irreversible damage to the environment and humanity. For this reason, the world community made a commitment in the Paris Climate Agreement of December 2015 to push ahead with measures to limit global warming at all political levels.

Phasing out coal by 2038 is thwarting Germany’s climate protection targets

Germany signed the global climate agreement, making it one of a total of 197 signatory states. In line with this accord, it has set ambitious CO₂ reduction targets for the coming decades. Too ambitious, it now seems. As it is only because of the corona pandemic and the associated economic slump that Germany will just about reach the 40 percent mark by 2020. The German government had known for some time that under normal conditions this target would be missed by a large margin. It was also clear to them that the phasing out of nuclear power and an increase in renewable energies would not be enough to achieve national decarbonisation goals. The discussion about new measures to reduce fossil fuel consumption surfaced, the coal phase-out moved onto the political agenda and a new panel of experts called the “coal commission" was created in June 2018. Its mission was to develop an exit strategy for coal that would combine ambitious climate protection with sustainable regional and economic development.

The coal commission concluded to completely phase out coal by 2038, with fixed rates for reducing power plant capacity in 2022 and 2030. In its final report, presented to the government on 26 January 2020, it also proposes compensation of 40 billion euros for the companies, workers, regions and consumers affected. Its recommendations are advisory, but there is every indication that the government will implement them extensively.

According to media reports, the decision-making process was no picnic. Although the overwhelming majority completely agreed with the final report, a few spoke out against the time plan drawn up for phasing out coal. Their reasoning was that phasing out German coal by 2038 falls far short of what is needed to keep global warming below two degrees Celsius.

According to Carbon Brief, the time plan would not begin to bear fruit until after 2030, i.e. CO₂ emissions would start to be reduced alongside the business-as-usual scenario. This would prevent a cumulative 1.8 billion tonnes of CO₂ (GtCO2) from entering the atmosphere. However, an additional reduction of 1.3 GtCO₂ would be needed to meet the target.

To put it plainly: with the decision to phase out coal by 2038, the current German government has set the fate of its climate policy in stone. It will be unable to meet its own climate targets this year or in 2030.